Federal government wants fewer investment guarantees for China

Good morning dear readers,

it sounds nonsensical – and it is: it feels like half the federal government is currently talking about Germany having to become more independent of China. But the same federal government uses billions in tax revenue to make investing in China and other countries as convenient as possible for German companies.

But one after anonther.

As a consequence of recent experiences, “we have to expand our sales markets, our supply chains, our sources of raw materials and production sites so that we are not dependent on individual countries,” said Federal Chancellor Olaf Scholz (SPD) at the beginning of his trip to Asia in Vietnam. Economics Minister Robert Habeck (Greens) said at almost the same time at the Asia-Pacific Conference in Singapore: “We have to reorganize our trade policy. We need other countries, other partners.”

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The word China is not mentioned, but it is clear who is meant. Above all, Berlin fears the economic consequences if the regime in Beijing decides to attack Taiwan.

Olaf Scholz on a trip to Asia

The Chancellor warns against becoming too dependent on China.

(Photo: dpa)

At the same time, the federal government secures investments by German companies in China with investment guarantees worth billions. Thanks to these guarantees, companies can recover losses from the state if they have to write off investments because of a military conflict or expropriation. The German economy has currently secured around 29 billion euros from the state. In the future, companies should only be insured for three billion euros per country in which they are active. Here, too, the People’s Republic is not specifically named, but it is clearly a “Lex China”.

Personally, I have never understood this system of state guarantees for foreign business anyway. Why do taxpayers have to pay for it when German corporations gamble away in China or anywhere else? Only if companies bear the costs of a failed foreign investment themselves will they be able to adequately assess the associated risks.

The so-called China decoupling has so far primarily been a political goal. Among European managers, the enthusiasm on this issue is about as great as that of a horde of nine-year-olds who are supposed to be heading home after a children’s birthday party.

Roland Busch, Siemens boss and chairman of the Asia-Pacific Committee of German Business, puts it this way: “Without China, diversification is not possible. The German economy also earns a significant part of the funds for new investments, whether in research and development – ​​also in Germany – or for opening up new markets in China.”

Airbus boss Guillaume Faury is even clearer in the Handelsblatt interview: “I think it is unthinkable that the economic areas could break up. China will not decouple from the West as we are very intertwined.”

graphic

Accordingly, Faury’s China strategy for Airbus includes three points – grow, grow, grow: “We have a strong position in China with a market share of 50 percent. We want to expand that.”

The dilemma is obvious: In view of recent experiences with Russia, there is an urgent political need to reduce economic dependence on China. At the same time, China is Germany’s largest trading partner and, for many corporations, the last market that still promises profitable growth of a relevant magnitude. Too much good business to just pass up. And with every year that this trend continues, dependence on China grows.

The best reason for optimism: China is also dependent on imports and investments from Europe. And will therefore hopefully act more rationally towards Taiwan than Russian President Vladimir Putin did when it comes to Ukraine.

On Monday, the Federal Council will deal with the controversial citizen’s income in its special session. It is likely that the Union-governed countries will not agree to the law, then the Hartz IV successor regulation goes to the mediation committee.

What is the dispute between the traffic light factions and the CDU/CSU about? Where is the problem – and why? Labor market reporter Frank Specht has put together the most important questions and answers about citizen income for you.

CDU leader Friedrich Merz

The Union wants to support the planned standard rate increase, but rejects other parts of the law. From their point of view, the “demanding” compared to the “promoting” is neglected when it comes to citizen income.

(Photo: dpa)

The ultra short version of the article: From the point of view of the Union, the new law promotes too much and demands too little. But despite all the outrage pyrotechnics that various Union Grands burned down over the weekend, the points of conflict include nothing that cannot be resolved with a willingness to compromise.

sure: The Hartz IV recipients, some of whom have been stuck for many years in a system that offers them hardly any performance incentives, really deserve better regulation.

And then there is what is probably the shortest application process of all time, which we were able to witness on Sunday. The former head of T-Mobile USA, John Legere, enjoys cult status in the USA as a charismatic exceptional manager. On twitter He turned to the social network’s new owner: “Hi @Elonmusk, maybe I should run Twitter”. In the same tweet, Legere warned, “I’m expensive, but so was the price you paid for Twitter.”

Elon Musk’s response, also via Twitter, was one word: “No.” To which Legere replied, “Well, that was a short interview. But at least I tried.”

Pro tip: The Handelsblatt regularly gives advice on how older managers in particular can avoid typical mistakes in job interviews.

I wish you a day as beautiful as a successful job interview.

Best regards

Her

Christian Rickens

Editor-in-Chief Handelsblatt

PS: Shortly before the start of the soccer World Cup, we talk about our political and economic relationship with Qatar. And we sort the new power relations in the USA, Great Britain and Italy. Put your questions to our foreign correspondents Annett Meiritz, Christian Wermke, Torsten Riecke and Mathias Brüggmann. And with your registration, you will automatically take part in the raffle for three books each from “1001 Might” and “Guns n’ Rosé”.

Morning Briefing: Alexa


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